Assessing the Performance of Takeover Panels: A Comparative Study

Takeover regulatory regimes around the world seek to balance the conflicting interests of the parties involved in takeovers. The clearest conflict arises from the opposing aims of the shareholders of the company being taken over (target) and the acquirer (bidder) in regard to the price paid for the target shares and the amount of information provided. Another involves the target company’s directors, who are in the best position to advise target shareholders on the merits of the takeover bid and yet are likely to be concerned not to lose their position as a result of the takeover. Different takeover regimes adopt varying approaches to deal with these conflicts. This chapter focuses on regulatory systems that use a Panel or like body to make decisions in relation to takeover matters. Of all of the Panel bodies, the Panel on Takeovers and Mergers in the United Kingdom (UK Panel) is the most well-known. This is principally because it was the first of its kind, and has subsequently provided a model for a number of other like bodies around the world. In Asia, these bodies are the Takeovers and Mergers Panel in Hong Kong (HK Panel) and Securities Industry Council in Singapore (Singapore Council). Both of these jurisdictions have adopted a Takeover Code that is modelled to varying extents on The City Code on Take-overs and Mergers (UK Code). In contrast, the Takeovers Panel in Australia (Australian Panel) operates on a different basis from the takeover bodies in Hong Kong (HK), Singapore and the UK (Code jurisdictions). That is, rather than having a proactive role in enforcing a Takeover Code, the Australian Panel only decides applications made before it based on the Australian takeover legislation. As a result, the Australian Panel’s role focuses on resolving disputes between the parties involved in a takeover. Notwithstanding the differences in their names and functions, each of the above takeover bodies is responsible for ensuring that parties to a takeover act appropriately. Importantly, the bodies make their decisions based on similar aims and regulatory principles underpinning the respective regimes. First, each of the four jurisdictions is concerned to ensure that the target shareholders are given equal treatment. The Code jurisdictions achieve this by requiring a mandatory offer once an acquirer and associated persons have obtained control or reached a threshold of 30 percent of voting rights. In Australia, a general offer to shareholders is one of the key exceptions to a prohibition on acquisitions above a 20 percent threshold. Secondly, each jurisdiction requires shareholders to be given sufficient time and information to reach a properly informed decision. Thirdly, the systems operate on the basis that a target board requires shareholder approval for action that would frustrate a bona fide offer. This is consistent with general principles setting out that the target board must act in the interests of the company as a whole. Fourthly, the jurisdictions are concerned to ensure that there is not a false market in the securities of a company in relation to a takeover bid. As a result, they require that a takeover bid only be announced if the bidder can fulfil their obligations. Finally, each system operates on the basis that parties must observe the ‘spirit’ or underlying purposes of the takeover regime.